Is Tesla Turning Toward Success?

Might they actually make a go of it? Silicon Valley automaker Tesla Motors (NAS: TSLA) reported third-quarter earnings yesterday, and its report came with some nice surprises. Those surprises started with the top-line number: While the company lost $65.1 million, or a big jump from the $34.9 million lost in the year-ago quarter, its $0.55-per-share loss (excluding some items) handily beat consensus predictions of a loss in the $0.60 range.

That loss wasn't a surprise: As I noted after last quarter's loss, Tesla's burning a ton of money as it ramps up to start production of its long-awaited Model S sedan. That's how it goes in the car business. The surprise is that Tesla's already got a lot of orders in hand -- and some new evidence that its electric-car technology is worth taking seriously.

Want a Model S? Prepare to wait.The moment when the first saleable Model S rolls down Tesla's assembly line is still several months away, but that car -- and the next 6,500 or so that will follow it -- is already sold, or at least spoken for. Tesla CEO Elon Musk told Bloomberg last week that the company had orders for more than 6,500 copies of the Model S -- more than the company's anticipated first-year production.

That's an impressive feat for a vehicle from a start-up automaker, particularly considering that no copies of the production Model S currently exist for test drives. Moreover, that's mostly new business: Musk said that only about 600 of those orders are from buyers of the company's first car, the expensive Roadster.

All that said, it's still premature to count those sales as a done deal for Tesla. While Model S orders do require a $5,000 "reservation payment," which is high enough to be taken seriously, those payments are fully refundable, according to Tesla's website. If the first cars sold end up having trouble, or don't live up to Tesla's promises in some important way, those orders could evaporate in a hurry.

Long story short: We'll have to wait until the Model S is at dealers before declaring its launch a success. But Tesla had some other surprises with its earnings announcement, suggesting success on a different front.

Some big names are taking Tesla seriouslyOne of Tesla's first big-name investors was Mercedes-maker Daimler (OTC: DDAIF), which bought -- among other things -- the first right of refusal to buy Tesla outright should another automaker try to acquire it.

That was a strong early sign that Tesla's electric-vehicle technology was worth taking seriously, and it was followed by sizable investments from Panasonic (NYS: PC) , which will make the batteries for the Model S, and a big commitment from Toyota (NYS: TM) , which sold Tesla a factory and promised to collaborate on an upcoming electric version of the popular RAV4 SUV.

Yesterday, Musk announced a different sort of investment from Daimler: A letter of intent to supply a "full powertrain" for an upcoming Mercedes-Benz model. Think about that from a public-perception standpoint: If Tesla's technology is good enough to get put in a Mercedes, consumers will likely be thinking, "It's probably pretty good."

But is it? Or is it just that Daimler's electric-vehicle efforts are lagging behind global giants like Toyota and General Motors (NYS: GM) , and the company feels an urgent need to play catch-up?

I'm not sure it matters. This is a coup for Tesla.

Tesla still has one big advantageI've said for a while that I think Tesla's most likely route to long-term profitability is as a supplier of electric powertrains and technology to global automakers. Making money in the auto business -- especially the luxury-ish end of it that Tesla has targeted with the Model S -- is a challenge even for global giants with huge R&D resources and vast economies of scale. I've been skeptical that Tesla is ever going to be able to do that in an enduring way, and I remain skeptical -- 6,500 Model S orders notwithstanding.

But Tesla has shown one big technological advantage, and clearly it's enough to capture the attention (and dollars) of the likes of Daimler and Toyota. Unlike the mass-market electric vehicles from Nissan (OTC: NSANY), Ford (NYS: F) , and the other global producers, which are (so far, at least) short-range propositions, Tesla's Roadster has the 200-plus-mile range needed to be used as, well, a real car. You can go away for the weekend in it, not just commute a few miles each way.

That's huge -- a big step toward the idea that an electric vehicle can really replace your gas-powered beast. It's also, at least right now, part of the reason why the Roadster has a six-figure price tag. Range costs money. What's possible on a low-volume six-figure sports car is harder to do on a $30,000-ish car like a Nissan Leaf or the upcoming Ford Focus Electric -- at least right now.

The future: Some clouds, some promiseIt's likely that Tesla's ace-in-the-hole range advantage will go away in time. There's just too much being invested in moving the technology forward by companies whose resources dwarf Tesla's. But meanwhile, Tesla and its rock-star CEO seem to have stepped away from the juvenile trash talk they were dishing out before their IPO and set about the business of developing more products worth taking seriously. Musk now predicts that Tesla will be profitable in 2013. While I'm still skeptical of Tesla's long-term prospects, if the company can successfully pull off the Model S launch, the future could start to look a lot brighter.

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